The EU banking regulator has approved a move by AIB to begin the process of repaying its debt to the State.
It will see AIB pay back €1.7bn in the coming months, as part of the Proposed Capital Reorganisation.
The bank also expects to repay €1.6bn in contingent capital notes by July, which was another form of finance provided to AIB as part of its bailout.
In a statement, AIB CEO Bernard Byrne has said the development is a key milestone and positions the group to repay capital to the State and return to private ownership over time.
The repayments are subject to approval at an upcoming general meeting of its shareholders, however this is merely a formality as the bank is 99% owned by the State.